Much has been written recently in the financial press and various business school publications on what makes a merger or acquisition a success or failure. One of the most striking things however, seems to be the lack of attention paid to the emotional reactions of individuals, groups and indeed whole corporations to this process, which is now almost an every day occurrence.

My own professional work has involved working with a number of ‘ blue chip’ organisations over the years who have undergone such a process. Not surprisingly perhaps they often turned to me for advice and support on how to proceed and offer the best way forward for people caught up in the maelstrom of feelings produced by merger and acquisition activity.

The general view when conducting merger and acquisition activity is - “get on with it”, preferably quickly, and communicate with all staff members as honestly and frequently as you can. Even when there is nothing to communicate, say so. This makes sense to me from a psychological viewpoint. Reduce anxiety, remove the opportunity for rumour to spread with the wrong information and generally try to keep peoples' stress levels as low as possible.

Why? Because once a merger or acquisition has been announced the emotional brain takes over (it acts more quickly than the rational mind) and people start to behave in all sorts of irrational or illogical ways. The results on sales and productivity at this point can be devastating for the company, as anyone who has ever participated in merger and acquisition activity knows. “ Whatever happened to the customer? “ is always a key question. Generally the company or companies become wholly preoccupied with themselves, internally focussed and, at least initially, on “red alert”. Focus on “the customer” is nowhere to be seen. What does this do to the bottom line of the business? Profits disappear as quickly as the customer focus.

What sort of reactions can we expect from a workforce (or two in the case of a merger) once the merger and acquisition activity has been announced? Daniel Goleman in his book “ Emotional Intelligence” gives us some solid information on the different types of emotions, how they may be experienced and how even our childhood experiences or perceptions can colour our vision in times of distress. The book is valuable reading for any senior manager who is contemplating or participating in merger and acquisition activity.
I have tried to summarise a few of the more prominent emotions that I have dealt with during M&A activity. For brevity and because the emotional brain is symbolic, i.e. it likes pictures, metaphors and parables rather than critical mechanically produced data, I have chosen to represent the process in pictures.

1. "On a high" - “ I might get a better job “ “ I’m for the high jump “(I’ll get fired).

Individuals will respond differently depending on their personal history and level of optimism about the process.

2. "Fog" - “I’m afraid” - “I can’t see my way through” - “Am I the only one with this feeling?” - “I can’t see how others are reacting and I’m alone with my fear” - “Dare I say how I feel?” No.

3. "Sharks" - Once the two companies are brought together as part of a merger (very few are actually mergers) usually one culture dominates. Then the company which is not ‘the winner’ often feels that they are in shark-infested water and need to be ultra-cautious about what is said and to whom (paranoia). This paranoia is, of course, based on reality – as they can no longer rely on their informal network (“ the way things get done around here “) for support. New rules now apply and they don’t know them.

4. "Soup" - This is more positive than might appear. Once some informal communication has begun then people begin to realise that they are often in the same place. Even people in the acquiring culture are fearful of change (most of us are at some level) and honest dialogue can begin to take place.

At Thompson Dunn we have put together a specific workshop “Leading yourself through change“ which is designed to help support organisations going through such a process. We feel strongly that each person must take individual responsibility for his or her outcome during merger and acquisition activity. In other words, if you don’t like the flavour of the ‘soup’, what are you going to do about it? We profoundly believe that M&A activity is organic, complex, subtle and heavily dependent for its success on the ‘ buy in ‘ from the whole community - the acquired, those doing the acquiring and people at every organisational level. The process is not linear, rational and mechanistic, which is often the way in which the process is handled. People based consultancies like ourselves need to be involved early in the process if we are to be effective, particularly when advising senior management on ‘ soft ’ issues which, we believe, will ultimately make or break the deal.

Pat Thompson
Managing Director Thompson Dunn

REFERENCES

Emotional Intelligence
Daniel Goleman ( ISBN 0-553-09503-X)

Flow – The Psychology of Optimal Experience
Mihaly Csikszentmihalyi (ISBN 0-06-092043-2)

The Living Company
Arie de Geus (ISBN 1-57851-820-2)

What Colour is Your Parachute?
Richard N. Bolles (ISBN 1-58008-727-2)